INSIDE TRADER TO PAY FINE, PAY BACK MONEY ON PENNY STOCK DEAL

The following is from the SEC website:

"June 29, 2011
SEC v. Richard Verdiramo, Vincent L. Verdiramo, Edward Meyer, Jr., and Victoria Chen, Civil Action No. 10-CIV-1888 (S.D.N.Y.)
COURT ENTERS FINAL JUDGMENT AGAINST EDWARD MEYER, JR.
The U.S. Securities and Exchange Commission announced today that on June 27, 2011, the United States District Court for the Southern District of New York entered a Final Judgment that enjoins Edward Meyer, Jr. from violating the registration and antifraud provisions of the federal securities laws, orders him to disgorge $62,050 in ill-gotten gains, and requires him to pay civil penalties of $62,000. In addition, the Court barred Meyer from participating in any penny stock offering and from serving as an officer or director of any reporting company. Meyer consented to the entry of the Final Judgment without admitting or denying any of the allegations of the Commission’s Complaint.

In its Complaint, the SEC charged that Meyer violated the registration provisions of the federal securities laws when he sold shares of RECOV Energy Corporation between April and November 2005. According to the Complaint, RECOV issued these shares to Meyer after he and defendant Victoria Chen entered into a contract to buy a controlling interest in RECOV from RECOV’s principal, defendant Richard Verdiramo, and his father, defendant Vincent L. Verdiramo. The Complaint alleges that shortly after receiving the RECOV shares, Meyer began selling them on the open market. The SEC charged that Meyer violated Section 5(a) of the Securities Act of 1933 because his sales of RECOV shares were not registered with the SEC or subject to any exemptions from the registration provisions. The Final Judgment orders Meyer to disgorge his ill-gotten gains from these violations, which totaled approximately $48,000, and to pay a $48,000 penalty for these claims.

The SEC also charged Meyer with insider trading based on his sales of RECOV stock in August 2005. According to the Complaint, in October 2004, Meyer began working as a consultant for a private company that subsequently engaged in merger negotiations with RECOV. Meyer signed a confidentiality agreement in connection with his engagement as the private company’s consultant. The Complaint alleges that in July 2005, the private company’s principal told Meyer that he intended to terminate merger negotiations with RECOV. The Complaint alleges that Meyer sold RECOV shares after he learned of the principal’s intention to terminate merger negotiations and before the August 2005 public announcement that the parties had terminated merger negotiations. As a consequence of these trades, the Complaint alleges that Meyer avoided losses of $14,000. The SEC charged that the private company’s intention to terminate merger negotiations was material, non-public information, and that Meyer violated Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5 when he sold RECOV stock while in possession of that information without disclosing his intention to trade. The Final Judgment orders Meyer to disgorge the $14,000 of ill-gotten gains from these violations and to pay a $14,000 penalty for these claims.

The Commission’s pending litigation against the other defendants in this matter is ongoing."